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IRS paid bonuses to tax-delinquent employees, report says

(AP/J. David Ake)
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The Treasury Inspector General for Tax Administration said the IRS between October 2010 and December 2012 doled out more than $2.8 million to about 2,800 workers with recent conduct issues. That included more than $1 million in cash awards for roughly 1,100 employees with federal tax-compliance problems, the report said.

Inspector General Russell George noted that the government does not prohibit bonuses for workers who fail to pay taxes, but he said the practice creates a “conflict with the IRS’s charge of ensuring the integrity of the system of tax administration.”

Republican lawmakers have expressed growing frustration with federal employees who don’t pay their taxes. In 2011, about 3.6 percent of the government’s 3 million civilian employees owed back-taxes totaling more than $1 billion, according to IRS data.

Last year, Rep. Jason Chaffetz (R-Utah) sponsored a bill that would have required agencies to fire employees with “seriously delinquent” tax debt. The measure died in the House after winning approval from the chamber’s Oversight and Government Reform Committee.

Sen. Tom Coburn (R-Okla.) has repeatedly proposed a similar legislation to no avail.

Critics argue that the bills unfairly target civil servants among the many Americans who owe back-taxes. Rep. Elijah Cummings (D-Md.) said of the Chaffetz measure last year that the government would have a harder time collecting taxes from individuals who lose their jobs.

Federal data shows that 1.08 percent of Treasury Department employees, including those with the IRS, were tax-delinquent in 2011. The rate was the lowest among federal agencies and considerably lower than the general public’s 8.2 percent rate.

National Treasury Employees Union president Colleen M. Kelley said Wednesday that IRS workers take their tax-paying responsibilities “very seriously,” but that they sometimes struggle to make payments when they face hardship.

“Unlike any other federal or private sector employees, IRS employees face termination for not paying their taxes, underreporting their income, or not filing in a timely manner,” Kelley said. “At times, however, IRS employees can face the same kinds of financial pressures that impact other taxpayers.”

The Office of Management and Budget and the Office of Personnel Management directed agencies in 2011 to reduce their spending on bonuses beginning the next year. The IRS complied with that order by trimming back its awards from $92 million in 2011 to $86 million in 2012, according to the watchdog report.

The inspector general recommended that the IRS implement a policy requiring management to consider conduct issues including nonpayment of taxes before providing bonuses. The agency agreed with the suggestions and said it plans to conduct a study by June on implementing the policy.

The IRS said in a statement on Wednesday that it has not issued awards during the past four years to any executives who were subject to disciplinary actions. The agency added that it is considering a similar policy for the entire IRS workforce, but that the move would depend on negotiations with the National Treasury Employees Union.

“The IRS takes seriously our unique role as the nation’s tax administrator,” the statement said. “We strive to protect the integrity of the tax system, and we recognize the need for proper personnel policies.”

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